Anthropic, OpenAI's finances ahead of IPOs reveal challenges

A look inside the financials of OpenAI (OPENAI) and Anthropic (ANTHRO) before funding rounds completed earlier this year shows a challenge -- the surging costs needed to train new AI models, the Wall Street Journal reported.

OpenAI expects to spend $121B

Escalating training costs are fueling massive cash burn at both OpenAI and Anthropic, delaying profitability by years, with OpenAI forecasting losses to continue until the 2030s and Anthropic expecting to break even sooner.

Anthropic counts revenue from technology sold via cloud partners, while OpenAI does not, and Anthropic's revenue is more enterprise-based, contrasting with OpenAI's largely free user base and focus on converting free users into paying customers.

Both are seeking large IPO raises to fund massive cash needs, with bankers attempting to ease index inclusion rules to secure bigger capital pools; Anthropic may IPO soon, while OpenAI faces internal debate on timing.